Accelerating successful smart grid pilots

Espen Mehlum,Head of ElectricityIndustry, World EconomicForumTianjin, China and Geneva, Switzerland --- (METERING.COM) --- September 13, 2010 - Over the past year there has been a significant increase in funding committed to smart grid pilots, and there an estimated 90 smart grid pilots in progress today, with at least as many in the pipeline, according to a new report from the World Economic Forum.

These pilots have been predominantly focused in North America, Australia and Europe, but we are now seeing considerable activity in South America, South Africa, China, India, Japan and South Korea. Furthermore, while the scope of these pilots shows the continued dominance of advanced meter reading (AMI), we are beginning to see more smart grid projects that are focused on network optimization and dealing with the challenges of accommodating a broad spectrum of low carbon technologies.

The report, Accelerating Successful Smart Grid Pilots, which is being presented today at the “Summer Davos” in Tianjin, says that governments have begun to recognize the centrality of smart grids as an enabler for a set of low carbon technologies, and are increasingly viewing smart grids as a strategic infrastructure investment that will enable their long term economic prosperity and help them to achieve their carbon emission reduction targets.

In addition here has been a broadening of the smart grids concept to intelligent cities, and the emergence of new entrants, including consumer products, telecoms and retail companies, in the utility value chain.

The report says that a review of the first crop of pilots suggest that while the industry has taken a significant step forward, there are clear opportunities to extract more insight and value from these investments. Key challenges include the struggle to create strong smart grid business cases in environments where regulatory incentives have not evolved and issues around data privacy, cyber security, interoperability and standards. There also are examples of conflation of objectives, whereby new technologies and pricing structures are rolled out in parallel, making it difficult to understand cause and effect when customers react poorly to the change, and pilots are encountering consumer engagement challenges, both in communicating effectively with the consumer and in delivering high-quality implementations in unpredictable field environments.

Nevertheless a number of lessons can be drawn:

Political and regulatory context: The right regulatory and policy framework for innovation and investment is required, as is the need to increase the level of international outreach and cooperation on standards.

Scoping phase: Needs include clarity on the test parameters and understanding when customers will be engaged, collaboration to develop commercial capability that trials new operating and business models, and development of consumer insight.

Execution: There is need to engage and educate consumers, and to re-engineer projects in the field.

Dissemination of the lessons learned: Lessons from the field should be shared and an opportunity exists to inform the regulatory/policy environment.

“With an estimated US$ 150 billion lost in a year in the US due to power cuts, smart grids can deliver a more reliable system with flexibility to utilize the full capacity of renewable energy,” said Espen Mehlum, head of electricity industry at the World Economic Forum. “However, utilities are struggling to create the business case for smart grids, as regulatory incentives often fail to provide the right incentives and reflect the low carbon agenda.”

The report was developed with Accenture and more than 60 industry experts.